The defining characteristics of stem cells are that they are capable of self-renewal meaning they can divide numerous times and maintain their undifferentiated state, and they are multipotent, meaning they have the potential to change into or differentiate into several different cell types.
Scientists and doctors are optimistic about the growing role of stem cells to treat serious diseases.

There are two broad types of stem cells: embryonic stem cells and adult stem cells.

Embryonic stem cells have the ability to create all cell types in our bodies. They have tremendous potential, but have not yielded any proven treatments and have been found to form tumors when implanted in animals. Obtaining stem cells from an embryo leads to its destruction. The ethical and technical issues surrounding embryonic stem cells present large hurdles for successful medical applications in the near future.

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Adult stem cells are multipotent, which can form more limited cell types than embryonic stem cells. Although adult stem cells typically can only create fewer tissue types, they are easier to control in research and clinical applications. Additionally since adult stem cells can be harvested from and used by the same patient, both immunogenic rejection and ethical controversy can be averted. As a result, adult stem cells are currently used to treat dozens of diseases, and the number of applications for adult stem cells being researched, or in clinical trials, or in clinical use continue to grow.

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There are two basic subtypes of adult stem cells- Hematopoeitic and Mesenchymal. 

Hematopoeitic stem cells form blood cells and are typically found in bone marrow or umbilical cord blood.

 

Mesenchymal stem cells form connective tissues such as bone, tendons, muscles, fat, and nerves as well as liver and pancreatic cells. 
Mesenchymal stem cells are typically found in bone marrow or the dental pulp in teeth.